Sony PSN Day 1 Digital Program Incites Ire of Retail Partners

Video game publishers, console makers and retail partners have always had a happy relationship. The console makers (Nintendo, Sony, Microsoft) make the consoles, the publishers make the games and the retail partners (Amazon, Target, Best Buy) sell the games. It’s an assembly line of sorts that puts the new releases in the hands of gamers. Until they get bored with it, sell it to GameStop for another game and the circle of video gaming life continues.
Feel free to hold you new game up proudly as the sun shines down upon it while all the other gamers look on.
The sales channels and methods aren’t specific to the video game industry of course. It’s a tried and true distribution method where the partners get a cut, the consumer gets the product and everyone’s happy. The concept of digital media is one that has forever changed the landscape for consumers, so it makes sense to offer games as digital downloads.
With the impending digital tsunami overtaking physical goods, it’s only logical that publishers offer full games as digital downloads direct to the consoles. All three major manufacturers have been doing that more or less since their inception, while still ensuring that retail partners are in on the action. None have offered digital downloads in quite the same way that Sony has just announced they’ll be doing.
Sony has a new plan called the PSN Day 1 Digital Program. Through it, gamers will be able to download a full, retail copy of a game for the normal price ($59.99) and play it the same day it’s released in stores. The initial list of games is impressive, including Resident Evil 6, NBA 2K3, Dishonored, Doom 3: BFG Edition, 007 Legends, Medal of Honor: Warfighter, Need For Speed: Most Wanted and Assassin’s Creed 3. This means you don’t have to camp out and don’t have to give your hard-earned money to GameStop.
Of course, you haven’t had to do either of those things in a long time, not since Amazon came along and offered Release Date Delivery and generally a $10 or $20 credit towards your next game.
Naturally, brick and mortar stores are the most upset here. Sure, they weren’t too keen on Amazon and NewEgg (among others) offering the games online. At least with B&M stores, if you didn’t want to wait for shipping, you could go to the store, get the game and be playing that same day. You’d only have to suffer through being out in public and about 20 replacement disk warranty pitches. At least you’d have the game though!
With the new plan, Sony is effectively telling B&M stores that they’re no longer valued. They’re telling online retailers if you can do it why can’t we? And they’re telling themselves cha-ching!
According to this article on Altered Gamer, there’s about $12.60 (20% Retail and 1% Distribution fees) that could go to the publisher or be split by the publisher and console manufacturer. The chart below breaks out the cost very easily. Obviously, it’s not gospel, but it gives you a good idea as to how much of the money spent on a game goes to which partner.
That $12.60 is money that the retailer will miss out on and will hurt their ability to sell just about anything else game related. If gamers aren’t buying games in retail spots, why go there at all? And it’s an additional $12.60 that—if split by publisher and console manufacturer—will be $6.30 more for Sony for a digital download. And that’s assuming the licensing deal for digital download is as simple as that.
Sony is in a spot of bother when it comes to sales. The company is getting trounced by Microsoft on the home console department, while Nintendo is eating its lunch in the mobile console department. Not only that, but the company overall is getting hammered on all of their products, with customers not quite as keen on the Sony brand as they used to be.
Since the PSN fiasco hacking fiasco from 2011 (rumored as a response to the company’s lawsuit against hacker Geohot), Sony has been desperately trying to regain floundering market share from both Microsoft and Nintendo. Those efforts have been spearheaded by a desire to actually at least try and cater to gamers, with PlayStation Plus at the forefront of the effort.
On its surface, PlayStation Plus seems like a great idea. For $50 a year, members get free games, early (and full access) to game demos, 1 GB of cloud storage and exclusives. Another benefit will be discounts on select new games that are part of their PSN Day 1 Digital program. The common link between both programs is their use of either “PlayStation” or “PSN” in them.
By keeping the business of video games “in-house” so to speak, it’s more revenue that Sony generates. If your friend raves about getting Assassin’s Creed III without leaving his/her house AND they get it for 10% off as a PlayStation Plus member, you’re more inclined to give both a whirl as well. Sony has effectively doubled its profits from the offer, as the company now has two PlayStation Plus subscribers as opposed to one.
At first glance the PSN Day 1 Digital Program sounds great for gamers. Dig a little deeper though and you’re likely to uncover a slightly desperate company in Sony looking for as many ways possible to hold on to escaping revenue. If that means locking gamers into a product that can’t be resold, traded or transferred in any way, well then you’ve got more PlayStation Plus members.
At the end of the day, all gamers are just numbers to the publishers. We’re subject to the whims of the game creators and can only vote with our wallets. Only time will tell whether or not the concept of day and date digital releases of video games will take hold in the marketplace.
One thing’s for certain. Sony’s decision may have caused an irreparable rift between the company and retailers. And if it works, the face of content delivery could continue to evolve. Here’s hoping the gamer still gets to game.